As a lifelong perfectionist, it’s always painful to admit mistakes. When it comes to my finances, I’ve made plenty of good decisions. But I’m willing to confess to at least a handful of errors:
1. Not saving more when I was younger. When I got my first full-time job, I was thrilled with the salary. I was making $16,000 a year—roughly twice what I’d been living on as a full-time student. My first few paychecks seemed like windfalls and I enjoyed spending every penny.
Of course, it didn’t take long to acclimate to my new lifestyle. Suddenly, $16,000 didn’t seem like so much. With every annual raise, I adjusted my spending habits to match my new salary. If I’d invested even 50% of those raises, rather than spending them all, I’d have a significantly larger nest egg today.
2. Investing too conservatively when I was younger. For many years, I kept my retirement savings in a “guaranteed” fund—one that promised a return of not less than 3%. I missed out on many years of stock market returns that were far higher. Once I educated myself and understood how to manage the risk of stock market SPX, +0.00% investing, I felt confident enough to move a large portion of my money into riskier investments.
3. Keeping up with the Joneses. When I was married, I felt socially obligated to project an image of success. The house we lived in was far larger than we needed. We purchased several new cars. We had lots of toys that provided us with lots of debt and little happiness. I’m thankful I no longer feel as though my self-image depends on the material objects I own.
4. Waiting too long to educate myself about money. It wasn’t until I was 45 years old that I became aware of the importance of being financially literate. Educating myself at a younger age would have saved me from some of the mistakes I made. It also would have increased the likelihood that I could retire at a relatively early age.
5. Delaying gratification too long. This is my most recent mistake. After getting divorced, I became obsessed with my finances. I started budgeting, saving and learning all I could about investing. I recently reached the point where I’m living off 50% of my salary and investing the other half. I’m proud of the progress I’ve made, but realized I’d become, perhaps, a bit too strict with my finances.
For at least a year, I’d wanted to get a dog but talked myself out of it. “Too expensive,” I told myself. “Think of all the vet bills, dog food and training classes you’ll have to pay for.” Thankfully, my heart eventually won this battle and, in January, my newest corgi joined my household. Every time I watch him play, it brings a smile to my face and the joy he injects into my life is worth every penny I spend on him.
Kristine Hayes is a departmental manager at a small, liberal-arts college in Portland, Ore. Her previous blogs include Fueling the Fire, longevity.Stanford.edu and Independence Day.
This column first appeared on Humble Dollar. It was published with permission.
